Travel companies are looking to invest in fintech products and services to boost revenue streams and improve the customer experience.
Research from Amadeus reveals most travel businesses see the area of fintech and payments as a high priority with 80% planning to match or invest more than they did in 2019.
The news will be unsurprising to many who have already embarked on some sort of fintech strategy or have been observing companies who have.
Headlines in the past week alone reveal the level of interest from travel companies in payment, insurance and other fintech product partnerships with established companies.
Fintech developments
Battleface unveiled its partnership to provide customizable trip protection to Tripactions users with the company's CEO Sasha Gainullin saying these sorts of initiatives "maximizes opportunities for higher conversion rates, customer cost savings and an improved customer experience."
In a further interesting move, Star Alliance, with members including Lufthansa and United Airlines, unveiled its plan to launch a credit card enabling users to earn and redeem points across the loyalty program’s airline members. In its report, Amadeus cites BigPay as another one to watch, with the fintech arm of Capital A (formerly AirAsia Group) raising $100m last year to develop its digital bank that offers debit cards, money transfers and insurance products.
And, multi-currency technology specialist Continuum will extend its services to airport, hotel and hospitality retail outlets via a partnership with CellPoint Digital.
Eamonn O’Shea, CEO of Continuum points to Gartner research that reveals an average conversion rate of e-commerce websites of 2.86% and says, “Allowing customers to transact in their currency of choice and with their preferred payment method will increase conversion rates by up to 20% as well as increasing the average transaction value by up to 8%.”
Meanwhile, Cheapoair partnered with Paybright and Agoda partnered with Visa to enable travelers to spread the cost of travel.
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Agoda’s parent Booking Holdings has made no secret of its strategy around payments as well as wider fintech with the launch of a fintech unit last year.
During its recent earnings call the company flagged further developments such as its liability insurance for alternative accommodation suppliers and an “enhanced payment solution” for property managers in the U.S.
Booking Holdings' payments platform, which it has been steadily developing in recent years, also processed more than a third of Booking.com's gross bookings in the first quarter of 2022.
“This year, we are focused on continuing to increase supplier adoption of payments while introducing new products and features that, over time, will improve the customer and partner experience and bring new revenue streams to our platform,” says Glenn Fogel, CEO of Booking Holdings.
Expedia CEO Peter Kern says his company is focused on “technology and how we’re combining one platform technology and payment.”
During the company’s recent Explore partner event he added that buy-now-pay-later (BNPL) is interesting but not a huge part of the business, saying, “It’s not going to change the consumer face of travel. I don’t think there’s evidence yet it’s a real game changer.”
So far, Hopper has been the company to watch when it comes to fintech products and services in travel.
Its products, including Price Freeze, Cancel for Any Reason and Flight Disruption Guarantee, contribute to a 10% average order value increase, or $40 per booking, according to the company.
The product-market fit for these products is clear – almost 60% of our app customers purchase at least one fintech product when making a booking.
Fred Lalonde - Hopper
“The product-market fit for these products is clear – almost 60% of our app customers purchase at least one fintech product when making a booking,” says Hopper CEO Fred Lalonde.
“And, they continue to buy these services in the future – a user who has previously bought one of our fintech products is between 2.5x and 7x more likely to purchase that product again when it’s presented on their return visit.”
He adds that there is increased interest from travel companies to use its fintech services via Hopper Cloud, which supports the Amadeus research around the heightened interest and investment in fintech.
Lalonde says, “According to our estimates, if all travel brands distributed travel fintech, it could generate around $200 billion in customer spend.”
Investment priorities
Little wonder then that a third of companies plan to equal 2019 levels of fintech investment while 50% plan to increase investment, according to the Amadeus study.
Respondents to the study were quizzed on their motives for fintech investment with most citing boosting the traveler experience first and increased revenue second.
They were also asked to list their fintech investment priorities for 2022 split into existing and emerging capabilities.
More travel companies say they plan to invest in existing capabilities in 2022 with alternative payment methods, strong customer authentication and fraud ranked as the three top priorities.
When it comes to investment in emerging products and services, NDC payments, BNPL and multi-currency pricing are the top priorities.
David Doctor, EVP of payments at Amadeus says, “Fintech stands out as an area of the travel business where you can provide new value-added services that bring revenue, while also improving the traveler experience. That’s why businesses are channeling scarce resources in this direction, and Amadeus is investing heavily too. We expect to double the people in our payments team by the end of next year compared to 2021.”
There is little doubt travel companies across all segments will benefit from investing in fintech products and services as the industry rebounds. Those already riding the travel and fintech wave are reaping rewards while those getting ready to dip a toe in the water can only benefit from the experience of the first movers.
The Amadeus travel fintech investment trends 2022 was compiled earlier this year with responses from more than 70 senior executives from large airlines and travel sellers, with 60% representing travel companies with annual revenue ore more than €1 billion and 40% from companies with annual revenue of more than €500 million.